JOHANNESBURG — Forget the Africa of war, poverty, famine and disease, the speakers at the recent Retail Congress Africa seemed to urge.
The old, weary tropes about Africa no longer apply, claimed Thebe Ikalafeng, who opened and closed the two-day event at Johannesburg’s Sandton Convention Centre. The founder and chairman of Brand Africa, Ikalafeng is considered the foremost global African branding and reputation expert.
“There is a new Africa rising,” he said. “It’s an Africa where everybody wants to come to [sic]. We, as a continent, we have stopped begging, stopped borrowing. We have moved on. And everybody wants to eat from our plate.”
Africa is home to the fastest-growing number of dollar millionaires in the world — according to recent data released by New World Wealth, there are about 165,000 high-net-worth individuals living in Africa, with combined wealth holdings of $660 billion, which equates to roughly 28 percent of the $2.4 trillion in total individual wealth held on the continent. South Africa alone has 48,700 dollar millionaires, representing 29.5 percent of the total high-net-worth individuals living in Africa.
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The data also show that the number of dollar millionaires in Africa has grown by 150 percent from 2000 to 2013, more than double the worldwide growth rate of 73 percent for the same period.
These wealthy individuals — as well as the aspiring middle class — are not shy about living the life. Nigerians, for example, have become almost legendary in the Champagne industry as they are among the world’s largest consumers of bubbly.
“In Nigeria, there is this huge Champagne culture,” said Jennifer Obayuwana, executive director of Polo Luxury Group, purveyors of luxury watch brands such as Rolex, Cartier, Breguet, Longines, Chopard and Hublot in Nigeria and Ghana. The company has just begun to carry fashion accessories from Gucci, Ferragamo, Balenciaga, Jimmy Choo, Nancy Gonzalez and Dolce & Gabbana, among others. “We drink Champagne like it’s going out of fashion. We drink Champagne on Monday after work, when someone comes to visit. There’s Champagne for every occasion.”
The Champagne business in Nigeria has become so big and booming, she added, “that one of the executives from Moët & Chandon had to come to see for himself that those amounts of Champagne were actually being consumed in Nigeria.”
The country is also one of the fastest-growing markets for private jets, thanks to the oil boom. All of which means, according to Obayuwana, that luxury brands want a piece of the African market.
“Africa has seen 6 to 8 percent growth on average in the last ten years,” she said, “while Europe has been experiencing a slowdown in the consumption of luxury brands, and in China, too. But more Africans are travelling. Nigerians are among the top five consumers of luxury goods worldwide. So there has been accelerated interest from the luxury brands. They see Africa as a flourishing, vibrant market.”
Getting into the African market, however, is not that simple. “Africa is a continent, yes, of 54 countries,” declared Marc Oliver, who together with Inés Cuatrecasas founded the fashion label Mille Collines in Rwanda and now has a network of boutiques throughout Kenya. “But I prefer to think of Africa in terms of cities. It’s like, in Nairobi, we have a market, but if I go to any other city, it may not necessarily work for our brand.”
“We started out at the Village Market in Nairobi in 2010,” added Cuatrecasas, “then we opened in The Junction, had another shop in the Village Market, and then the Oval, which is a new shopping mall, and now the Kempinski Hotel.”
The market in Kenya, she said, exists “in pockets. Basically, Nairobi is so big, like Johannesburg, and there are so many pockets of population, and they are more loyal to their particular area, rarely venturing out to shop elsewhere. Those who live near Westlands tend to shop in Westlands, for instance.”
Westlands Shopping Centre was the scene of last year’s terrorist attack and hostage crisis in which more than 68 people were killed. “We had the lease contract on top of the table,” Oliver recalled. “We were ready to sign that day when it all happened. It was lucky but it was very bad news for the retailers in the mall.”
“It really impacted on the mall,” Cuatrecasas added, “and the performance of the stores was really affected.”
While the mall culture is strengthening in Kenya and firmly entrenched in South Africa — malls are constantly being upgraded and expanded to reflect both the growing customer demand for a better shopping experience and the retailers’ emphasis on the right space in the right location to showcase their brands — in Nigeria, the mall infrastructure is woefully inadequate.
“That is one of the challenges when doing business in Nigeria, as well as in the rest of the continent,” admitted Obayuwana. “In West Africa, we’re seeing the absence of quality malls. We also have no high street, like Champs-Elysées, Bond Street or Fifth Avenue.
“Skilled manpower is also a big issue for us. We’re dealing with clients who are spending $50,000 for a Piaget, $80,000 even. They expect preferential treatment. They expect what they find anywhere in the world. So it’s a major challenge for us because we have manpower who are not very exposed, and so it adds to our training costs because we are constantly trying to orient the staff in how to deal with the clients.”
While Africa brims with possibilities for luxury retail, it is not an easy continent to navigate, and finding the right local partner is essential for any brand wanting to come into the market.
Speaking at a panel discussion on growing across Africa, Tony Batllo, expansion general manager for the Spanish fast-fashion brand Mango, emphasized how keen the company was to apply its business model 100 percent in whatever market it enters.
“Of course we work closely with our partners,” he said, “but the design of the store, the training, the system of payment and information — they are all coming from us. We have only one central office, and that’s in Barcelona. So it is important to implant the model as it is.”
Batllo advised brands entering Africa to “book for six months and stay. Meet with everyone, get to know the market very well and be very open with your values, especially with anyone who would be a potential partner. You want a partner to understand the brand the way you do.”
When the Polo Luxury Group branched into fashion, Obayuwana said the brands she approached were happy to enter the Nigerian market through her company.
“Nigerian p.r. is not the best,” she added, referring to government corruption scandals and the recent Boko Haram kidnappings, “so [the brands] noticed all these huge purchases from Nigerians abroad. One of the reasons for these purchases is that these brands don’t have platforms in Nigeria. So Gucci and the other brands, they were interested, but they were also cautious. On the one hand, there’s a lot of money, but on the other, there’s no high street. There are a lot of inconsistencies in the market. So they want to work with a partner they can trust.”
Antonis Kyprianou, general manager franchise for another Spanish retailer, Cortefiel, who attended the congress, said that working with a local partner “is our model. We find this more efficient because we need to work with local expertise. That has been the message from everybody here the past two days. So this is what we have been doing and it works very, very well for us.”
The group, whose portfolio of brands includes Cortefiel, Pedro del Hierro, Springfield and Women’s Secret, has launched all four brands in Luanda, Angola, and three more stores are slated to open. Ghana is next, while Tanzania has been open for a year now.
“We want to open in South Africa soon and in other countries in sub-Saharan Africa. We had Women’s Secret in Africa but we terminated that franchise because it really wasn’t working. We are in talks now with a new partner. We prefer to start fresh because South Africa is a very important market,” said Kyprianou.